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After Britain and Japan, Sri Lanka is also in chaos.
In just 24 hours, the president and Prime Minister of Sri Lanka announced their resignations.
It’s really a night of change. This week’s great earthquake in international politics is still continuing.
The reason why Sri Lanka’s president and prime minister resigned at the same time is very simple, because Sri Lanka has encountered the worst economic crisis since its founding.
I saw this news as early as may this year. At that time, Sri Lanka had us $12.6 billion of foreign debt due, but it was unable to repay it.
You know, if ordinary people don’t repay their debts, they will report them to the credit bureau and affect their personal lives, not to mention the country? If a country cannot repay its debts when they are due, its credit will go bankrupt.
The most direct impact of national credit bankruptcy is that the domestic currency and financial products will not be guaranteed, and there will be a large-scale slump and depreciation.
To put it simply, we often buy Chinese government bonds, and some people will also buy U.S. government bonds, right? Buying government bonds, in the eyes of investors all over the world, is a win-win business, but also when the economy is bad, I can’t make any money on my stock, so I buy government bonds to avoid risk.
Because the national debt is directly linked to the country’s sovereign credit, I bought your onemillion national debt of China or the United States, and I’m not worried that you will rely on my account at all, because you are such a big country here, how can you lose credit for my onemillion?
Therefore, for a country, sovereign credit is very, very important. It can be said to be the cornerstone of a country’s economy. Once the credit collapses, the country will be doomed.
This is the simplest truth. No matter how difficult it is economically, any normal country will give priority to ensuring its sovereign credit.
Sri Lanka of course wants to protect it, but it can’t.
In the words of the Prime Minister of Sri Lanka, “it is a challenge for the Ministry of finance to find $1million”.
As a result, Sri Lanka was forced to default on its debt.
This is also the first case of sovereign debt default since mankind entered the 21st century, and it is also the first case of sovereign debt default since Sri Lanka became independent from Britain in 1948.
After the collapse of international sovereign credit, Sri Lanka has experienced a serious shortage of fuel, food and medicine. Power is cut off for hours every day, and gasoline and diesel need to be purchased in line.
Seeing this, the problem comes. Why does Sri Lanka have such a serious economic crisis?
There are two main reasons.
First, Sri Lanka’s tourism industry has been hit hard by the impact of the COVID-19.
Sri Lanka is an island country in South Asia, next to India. It is a small place with a land area of only 65000 square kilometers, almost the size of two Hainan Islands. The population is only 22million.
However, Sri Lanka, because of its unique geographical advantages, endless beaches, hospitable people, flocks of elephants and tempting food, and because it is rich in sapphire, has the reputation of “Pearl of India”.
This is a country of seeing flowers in the fog. Beaches, waves, forests, and heavily made-up colors continue to become paintings, with infinite charm.
This is Sri Lanka’s famous scenic spot, Lake khanti.
A quiet, a touch of sunshine, a heart of tranquility.
There is also the Buddha’s tooth temple, as the name suggests, because it stores the Buddha’s tooth relics.
Of course, as an island country surrounded by the sea, the most famous is the beach here.
There is no blue sea and white sand here. Sri Lanka’s 1239 km coastline is almost all golden sand beaches, with less white purity, but more ambiguous warmth.
Well, after watching the promotional film, everyone pay attention. When the epidemic is over, it’s a good choice to travel to Sri Lanka.
But it’s still the same sentence. At present, the epidemic situation is current. If you can’t go out, try not to go out. Therefore, no tourists come to contribute tourism income.
This is undoubtedly a devastating blow to Sri Lanka, where tourism accounts for the bulk of the national economy.
For a small country like Sri Lanka, the economy and industry are relatively single. Once there is no tourism, the streets will be empty.
Without tourists, local businesses will naturally not make money.
Merchants can’t earn money, so they naturally have no ability to pay wages to employees and pay taxes to the state.
The state has no tax source, and there is no way to help merchants.
So, one after another, the vicious cycle continues.
This is the first reason for Sri Lanka’s economic crisis.
But this is not the most direct.
Let Sri Lanka debt storm, the direct cause of national bankruptcy: and the dollar.
Since the beginning of this year, the Federal Reserve has continued to raise interest rates, raising interest rates three times, by 150 basis points at a time.
I have also written an article to analyze that the most direct impact of the interest rate hike is that the US dollar begins to flow to the United States from all over the world, which directly leads to the debt burden of emerging countries, coupled with the food and energy supply shortages caused by the conflict between Russia and Ukraine, as well as the impact of global inflation.
Finally, Sri Lanka can’t hold on.
After the breach of national credit sovereignty in May, those foreign investors in Sri Lanka were frightened and withdrew their funds. Even some rich people in Sri Lanka sold their factories and transferred assets overseas in order to avoid risks.
Thus, Sri Lanka is even worse.
But even so, the economy is still deteriorating. Sri Lanka’s consumer price index (CPI) soared by 54.6% in June compared with the same period last year, of which transportation prices soared by 128% month on month, and food prices soared by 80% month on month.
Facing such a bad situation, how should the government deal with it?
Very simple, printing money and tickets, which Sri Lanka has completely learned from the United States.
But the reason why the United States can flood is that people can pass the risk on to other countries to accept the offer. As for Sri Lanka, you also print so many money. Who will accept the offer for you?
Do you have the strength of the United States to kidnap the world?
As a result, the evil result of excessive issuance of money is extremely vicious inflation.
On July 5 this year, the Prime Minister of Sri Lanka told the parliament before the monetary policy assessment meeting that the inflation rate of the country was expected to reach 60% and hoped that the parliament would authorize the International Monetary Fund to seek assistance.
The next day,
The Prime Minister of Sri Lanka said that the country has gone bankrupt, and the crisis may continue until the end of 2023.
However, before the aid was approved, angry Sri Lankans took to the streets to protest.
The government sent police to spray tear gas and drive away the crowd.
But it has little effect.
Too many people took part in the protest. Finally, even the police joined.
They even broke into the presidential palace, where there was a swimming pool. The protesters jumped directly into the pool to enjoy a cool summer.
Sri Lankan President Rajapaksa saw that the situation was over and had fled his residence ahead of schedule.
The president ran away, and a large number of officials left in the capital also fled the capital by plane.
That night, the Prime Minister of Sri Lanka announced his resignation, but the angry crowd did not let him go and set fire to the prime minister’s office late at night.
The next day, the president who went out of town also announced his resignation.
In this regard, the government of Sri Lanka collapsed, and the domestic people were boiling, leaving only a mess.
So what is the impact of the chaos in Sri Lanka on China?
First, according to the information on the website of the Ministry of Commerce, from January to December 2021, the bilateral trade volume between China and Sri Lanka was only $5.9 billion, of which China exported $5.25 billion to Sri Lanka and imported only $650million from Sri Lanka.
The non-financial direct investment of Chinese enterprises in Sri Lanka was only US $130million, an increase of 174.8% over 2020.
This is the achievement of our the Belt and Road.
Therefore, even if Sri Lanka’s economy collapses, the impact on our country is negligible.
Economically, it is ignored. Politically, Sri Lanka is only an island country in South Asia. Its geopolitical role is almost zero, and it has no impact.
However, the riots in Sri Lanka, like a mirror, once again stood in front of us.
Look, Sri Lanka today is Hong Kong yesterday.
Had it not been for the timely introduction of the national security law, Hong Kong would not have known what chaos would look like.
Western countries have been interfering in the Hong Kong issue and the Xinjiang issue in order to mess up our country. They hope that such a scene can be staged in China.
The wolf’s ambition is obvious!
The vast majority of Chinese people are very sober and patriotic. We sincerely hope that the country is good.
Take the article written yesterday for example, there was a Jingri molecule who sprayed feces all over his mouth.
As a result, I just looked at the data, and there were 227 people who liked me. Only three people supported him.
Comment and praise, which is very illustrative.
Because like is completely anonymous, it won’t display your IP address, and it won’t record your avatar and user name. What it reflects is the most real idea in everyone’s heart.
I am very happy to see this result, which shows that 99.99% of Chinese people are very sober and patriotic, but there is still a small group, 0.01% of the guys are bad people mixed in our masses.
Because they have been brainwashed by the universal values long instilled in the West.
For example, after reading this news in Sri Lanka today, they will be very happy and thinking secretly that if only our country did the same.
This kind of people who only hope for chaos in the country and cannot see the good of the country are collectively referred to as the “hate party”.
Here, I want to say to these nationalist parties: you are so naive. Do you think Sri Lanka is very happy when it is in such a mess, which is true freedom and democracy?
A country can’t even protect its president’s swimming pool. People can jump down to swim and absorb water at will. I don’t know what the hell you are happy about? You don’t want to think about what to do with your own house. When these rioters rush to your house to smash and rob, are you crying or laughing?
Then there is the hate nation party. Do you really think these rioters can bring hope and future to Sri Lanka?
With their free and rambling appearance, they jumped down and splashed at the sight of the pool, and wanted to take a bath in it.
What can be achieved?
Expect these people to bring hope and future to the country?
It’s really a dream!
Speaking of this, I suddenly remembered an old story.
On the morning of May 27th, 1949, it was still raining. Shanghai citizens opened their homes as usual.
But today, they were startled.
Because they were surprised to find that the wet concrete floors on both sides of the road were actually full of PLA soldiers in yellow uniforms.
I don’t want to say anything more, just hope you can ask yourself after reading the two photos:
Is it the people’s Liberation Army, which prefers to sleep on the road and resolutely refuses to enter civilian houses, that can bring hope to the country, or those who rush into the swimming pool of the presidential palace and take a bath, there is hope?